Treasuries Close Roughly Flat After Seeing Early Strength

(RTTNews) - Treasuries moved to the upside early in the session on Thursday but gave back ground over the course of the trading day.

Bond prices pulled back off their early highs in morning trading and spent the afternoon lingering near the unchanged line. The yield on the benchmark ten-year note, which moves opposite of its price, inched up by less than a basis point to 4.575 percent after hitting a low of 4.517 percent.

Treasuries initially benefited from bargain hunting in the new year following recent weakness in the bond markets, which has seen the ten-year yield reach its highest levels in seven months.

Buying interest waned shortly after the start of trading, however, as a Labor Department report showing an unexpected decline by weekly jobless claims seemingly provides support for the Federal Reserve's measured approach to lowering interest rates.

The report said initial jobless claims slipped to 211,000 in the week ended December 28th, a decrease of 9,000 from the previous week's revised level of 220,000.

The dip surprised economist, who had expected jobless claims to inch up to 222,000 from the 219,000 originally reported for the previous week.

With the unexpected decrease, jobless claims fell to their lowest level since hitting 209,000 in the week ended April 27, 2024.

"The claims data are consistent with a labor market that is strong enough to allow the Federal Reserve to proceed with rate cuts at a more measured pace in 2025," said Nancy Vanden Houten, Lead US Economist at Oxford Economics.

She added, "Our baseline is for three rate cuts this year, although the risk following the mid-December FOMC meeting is for fewer cuts."

Trading on Friday may be impacted by reaction to a report on U.S. manufacturing sector activity in the month of December.